Market research - Part 5

The company/brand selected for the research proposal project Is Wall-Mart - Market research introduction. INTRODUCTION Wall-Mart Stores, Inc. , branded as Wall-Mart, Is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. Headquartered In Bonneville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. It has over 11,000 stores in 27 countries, under a total 55 different names. It operates in India as Best Price.

The company is the world’s largest public corporation, the biggest private employer in the oral with over two million employees and the largest retailer in the world. Wall-Mart is a family-owned business, as the company Is controlled by the Walton family, who own over 50 percent of Wall-Mart through their holding company, Walton Enterprises. It is also one of the world’s most valuable companies and is also the largest grocery retailer in the US. The partnership between Birth Enterprises and Wall-Mart has been dissolved.

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Now Walter India Private Limited is a wholly owned subsidiary of Wall-Mart Stores Inc. Walter India owns and operates 20 Best Price Modern Wholesale stores in 8 states across India. Division of wall-mart: Neighborhood Markets (groceries) Cam’s Club (membership) Discount stores (FMC & apparels) Wall-Mart superstructures (groceries) THE PROBLEMS FACED BY WALL-MART Late entry Overlook competitors Destroy small businesses Joint venture & Nationalism Culture difference Suppliers Government Regulations The problem which is looked at In this research project is government regulation.

The statement of the problem- The problem which Is looked at In this research project Is the government for retail global companies makes it difficult to make any development in India so Wall-Mart wants to launch e-commerce. Objective of the study- it is to see how Wall-Mart will make a difference in the economy by online purchases. To see how the Indian market responds to e-commerce and will it help in increasing sales of the company. What will India do for Wall-Mart?

Wall-Mart needs India, and it needs success in India. At the same moment as the Joint venture in India was announced this weekend, Wall-Mart announced something stunning about its November financial performance. In the US, in stores that have been open at least a year, sales actually fell compared to last year. Same-store US sales fell Just 0. 1% – the decline comes to about $mm. It wouldn’t have been a decline at all if each US store had sold Just $1 ,250 a week in additional merchandise.

The performance is chilling because it’s only the second time in 25 years that Wall- Mart’s same-store sales haven’t grown. The truth is that while the US still accounts for more than 70% of Wall-Mart’s sales, the country is full up with Wall-Marts: 53% of Americans already live within five miles of a Wall-Mart, and 90% live within 15 miles. If an American wants to shop at Wall-Mart, he or she already is. So if Wall-Mart is going to continue to grow, it must tap new and receptive markets like India. What will Wall- Mart do to India?

The mood about Wall-Mart in the United States is conflicted, at best. For two years, there has been a noisy national debate about Wall-Mart’s impact – low prices, yes, but also low wages, poor working conditions, small merchants swept away, manufacturers squeezed. In the recent Congressional elections, prominent Democrat politicians routinely attacked Wall-Mart, despite the fact that millions of Democrat voters shop there every week. In developing nations, in contrast, the arrival of Wall- Mart stores is still greeted with gratitude.

But will Wall-Mart bring with it to India exactly the kind of business practices that cause resistance to it in the US? Indian’s retail market is likely to be transformed over the next 10 years, and Wall-Mart is determined to be part of that. When a superstore opens that can do $1 m or $mm in business a week, it’s going to vacuum sales away from small merchants. Yes, Wall- Marts, and all hyper marts, create hundreds of Jobs. But there is a big difference between being a shopkeeper, and working in a store for mega-corporation.

But at this Indian’s elected officials want to understand what happens when Wall-Mart arrives, hey need only consult local officials in China or Mexico or Missouri. And if Indian officials want to both usher in a new consumer era, and preserve some of the traditional aspects of Indian commerce, they need to act now – with zoning laws, with rules on the size of stores and the hours they may be open – before the hyper marts roll in. Once they dot the landscape, as we’ve discovered in the US, it’s too late to do anything but mourn the traditional ways of shopping.

SECONDARY RESEARCH FINDINGS Wall-Mart will open 50 cash-and carry-stores in the country in the next 4-5 years, a eve that will strengthen the presence of the retail major in the wholesale segment. The announcement comes a day after the Bops manifesto declared that the party will not allow foreign direct investment (FAD) in the multi-brand retail segment if it forms the next government. The BGP, in its manifesto unveiled Monday, said that it is not in favor of FAD in the multi-brand retail sector, though it was open to FAD in all other sectors if it led to Job and asset creation.

However, the company has refrained from entering the sector, citing stringent conditions related to mandatory 30 per cent local rouging. Given that 100 per cent FAD is allowed in the cash and carry segment, this sector presents an opportunity to the company to make in-roads in the vast Indian market. In a statement, Walter also said that it will launch business-to-business (BIB) e-commerce platform for members of its cash and carry ‘Best Price Modern Wholesale Stores’. “Walter is committed to India and we are excited about our growth plans.

We will continue to focus on the cash and carry format as we are very happy with the way it has shaped up in the last few years. The format is also poised o grow in India and we would like to serve the growing customer base by opening 50 new cash and carry stores over the next four-five years and extend the e-commerce platform to our cash and carry members with a virtual shopping opportunity,” Scott Price, president and CEO, Walter Asia, said, in the statement. The retailer currently has 20 Best Price Modern Wholesale Stores in the country.

The first store opened in Marital in May 2009. Currently, 100 per cent FAD is allowed in single brand retail, and 51 per cent is allowed in the multi-brand retail sector. Also, 100 per cent FAD is allowed in BIB e-commerce, but not in BBC e-commerce. Price also said that the company will take “a number of important steps to strengthen compliance so that we do the right thing everyday’. “We are evaluating and reinforcing procedures and programs relating to all compliance areas… And responsible sourcing among others,” Price added.

PEST ANALYSIS Strong opposition to FAD in Indian’s retail sector Taxation police – VAT Low access to banking facilities Economic analysis: GAP growth Foreign investments Money supply Inflation Social analysis: Corporate social responsibility Environmental safety Ease of shopping Technological analysis: Retail media network ERP system Online shopping CRM system CONSUMER ANALYSIS What will Wall-Mart do for Indian consumers? Wall-Mart will be a sensation in India – as it has been in China and in Mexico.

At the moment, there is Just a single hyper mart in the whole country, in Iambi. Indian’s rapidly growing middle class has more money to spend than any previous generation – but no place to spend it. Just 7% of retail spending in the country is in what westerners would consider “organized” retail stores. Even in China, that number is 20%. So Wall-Mart’s acres of low-cost merchandise from around the world, gathered under a single roof, will be like a carnival for a slice of Indian consumers.

Wall-Mart store openings in developing nations are frequently huge events – tens of thousands of Chinese show up when new stores open there – and with good reason. People everywhere are grateful to have the products of the world delivered to their doorstep at affordable prices. Competitors are competitors within an industry. Competition in the industry can be weak with few competitors that don’t compete very aggressively or it can be intense tit many competitors fighting in a cut-throat environment.

Key competitors of Walter in the retail sectors are: VA Barilla Group- It has a strong presence in apparel retail and owns renowned brands like Allen Solely, Louis Phillips, Trouser Town, Van Houses and Peter England. The company has started to expand aggressively to compete with other players. Trend- It is subsidiary of the Data group, operates lifestyle retail chain, book and music chain consumer electronics chain etc. Landmark Group K Rajah Crop Group Reliance Pantaloon Others stores are: Big bazaar Spencer Careful & metro are the main wholesale cash-and-carry brands.